Fraud Kicks in Months Ahead of Medicare Drug Discount Card

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Fraud Kicks in Months Ahead of Medicare Drug Discount Card

By Robert Pear, the New York Times

February 17, 2004

Federal officials said Monday that they had detected evidence of fraud in the marketing of drug discount cards under the Medicare law signed 10 weeks ago by President Bush.

In some parts of the country, people have gone door to door offering "Medicare approved" cards, though none have been approved and enrollment does not begin until May, federal health officials said.

Mr. Bush has said that the cards, to be issued by private entities and endorsed by the government, will deliver "savings of 10 to 25 percent off the retail price of most medicines," though the amount will vary drug by drug and card by card. In addition, as he noted in signing the legislation on Dec. 8, low-income elderly people will be eligible for "a $600 credit on their cards, to help them pay for the medications they need."

Beneficiaries can sign up for the cards in May and start using them in June. But already, federal officials said, some people are promoting the cards as if they had received a federal seal of approval.

Valeria Allen, an insurance specialist at the federal Centers for Medicare and Medicaid Services, said, "Someone is fraudulently impersonating or misrepresenting Medicare by telephone and by door-to-door visits to beneficiaries' homes, to discuss the Medicare discount drug program and to obtain personal identifying information from beneficiaries."

In some cases, Ms. Allen said, the caller seems to have obtained personal information about beneficiaries before visiting their homes.

Federal officials said the scheme was discovered by the Atlanta regional office of the Medicare agency, which covers eight Southern states. Medicare contractors in the West and the Midwest said they were looking into reports of similar activity.

Ms. Allen said that a Medicare beneficiary in Georgia had called the government and its local contractor wanting to know if Medicare representatives were going door to door, discussing the discount program.

"The answer should be no!" she wrote, and she added: "Beneficiaries should not be giving anyone their personal identifying information. Medicare has not begun its enrollment, marketing or outreach process yet for our beneficiaries regarding the prescription discount drug program."

The discount card will offer temporary assistance to the elderly and disabled until Medicare provides a full-fledged drug benefit in January 2006.

The deadline for companies to seek federal approval of discount cards was Jan. 30. The Bush administration said it had received 106 applications.

One possible complication is that the application form required companies to disclose any past or pending investigations or legal actions relating to their business practices.

At least two applicants, Medco Health Solutions and Express Scripts, are involved in such proceedings.

In a lawsuit filed by the United States attorney in Philadelphia, the Justice Department contends that Medco destroyed and fabricated records, billed clients for more pills than it delivered and switched patients to higher-cost medications in an effort to increase the company's revenue.

Express Scripts manages drug benefits for New York State employees. The company disclosed in June that it had received a subpoena from the attorney general of New York, Eliot Spitzer, seeking information about its compliance with antitrust and consumer protection laws. In December, two groups of state employees sued Express Scripts, asserting that the company had retained millions of dollars in discounts and rebates that should have been shared with state workers.

Both companies have denied wrongdoing.

"We are a large company with net revenues of $34 billion a year and 62 million beneficiaries," said John P. Driscoll, senior vice president of Medco. "From time to time we're involved in litigation, but we're confident in our ability to fulfill the requirements for the drug discount card."

The government will provide a Web site enabling beneficiaries to compare prices.

Such detailed information has not been easily available in the past and could be immensely useful to consumers. But consumer groups and drug companies said it would not be easy for the government or its contractors to compile the prices, which could change week to week.